TOMS’ Give-Away for Profit Business Model

Discussion
Apr 11, 2011

Last Tuesday, April 4, TOMS Shoes promoted its 4th annual "One
Day Without Shoes" campaign designed to raise awareness of the impact
a pair of shoes can have on a child’s life.

In 2006, founder Blake Mycoskie
took a trip to Argentina where he met a group of locals
who collected shoes for children who didn’t have any. That inspired Mr. Mycoskie
to create a company under a simple "one
for one" pledge: for every pair of shoes purchased, TOMS donates a pair
to a child in need. As of 2010, TOMS has donated over one million pairs of
shoes in over 20 countries.

Over 250,000 people across the globe went barefoot
on April 8 of last year in support of the "One Day Without Shoes" campaign.
This year, the founder said he expected millions to participate. Numerous stories
were told of students going barefoot for the day on college campuses, where
the canvas shoes are particularly popular, as well as at high schools. Nordstrom
hosted barefoot walks. Celebrities including Charlize Theron, Lenny Kravitz
and Pink also joined the cause.

Mr. Mycoskie’s story has been retold
countless times in the media, but he’s also been particularly popular on the
lecture circuit because his charity-based company is a for-profit.

"When I first decided that I wanted to do something about this problem,
I had a few options," Mr. Mycoskie told USA Today. "I could
have written a check to a charity or foundation for a one-time donation. But
it didn’t feel right. By being a for-profit, we’re more sustainable."

The
focus on "giving" also spawned numerous benefits, including inspiring
Ralph Lauren to develop a TOMS collection for his Rugby chain and American
Express to feature Mr. Mycoskie in an ad campaign. More broadly, it turns consumers
into brand advocates and draws a motivated workforce.

"It attracts the most amazing people into your company," Mr. Mycoskie
said in an address at the South by Southwest festival recently held in Austin,
according to South Africa’s The Daily Maverick. "The greatest competitive
advantage is to allow your employees to do something that makes them feel they
are giving back."

But, Mr. Mycoskie credits his company’s overall success
to the one-for-one simplicity. "When
people buy something they know exactly what is going to happen," he told USA
Today
.

On June 7, TOMS will announce its next one-to-one product that
will be its first outside the shoe category.

Discussion Questions: What do you think of TOMS’ business model? What can other brands learn from TOMS?

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10 Comments on "TOMS’ Give-Away for Profit Business Model"


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Kevin Graff
Guest
10 years 1 month ago

Bravo to TOMS! Brilliant business model, brilliant marketing, brilliant charity.

I would expect more and more businesses in the years ahead to attach their brands to issues, causes, and needs that are far more important to their customers and staff than the pursuit of profit. It’s often said that you cannot be in business today to just make money. What’s your ‘give-back’?

What TOMS does is show that you can be for-profit and still be charitably based.

David Biernbaum
Guest
10 years 1 month ago

The TOMS’ business model works in part because it’s associated specifically with shoes. Once TOMS’ starts to branch out into other categories the message and the model will lose its focus and its momentum.

Mark Burr
Guest
10 years 1 month ago
Why not? If all this can be done without selling even women’s shoes for less than $100, then why not? Good for them! It’s certainly not transferable to all categories, but there are certainly opportunities available. It might even be worth checking out the $79 Men’s Botas. I think there is a difference, however, in this example. There is a huge difference in actually carrying out your message, and just having a message. In this case, its walking the walk with shoes. It appears genuine and real. That is the difference. Talk won’t get any retailer there. The walk will. Unfortunately, the overwhelming number of consumers do not walk the walk with their wallets. Maybe that’s changing. Maybe it’s changing with retailers as well. We’ll see. There is the other side of the equation also. The side that says consumers want a ‘reason’. This is a good reason. It’s also combined with verifiable action. Even more important, it appears to be being done at a price that a very large part of the market can… Read more »
Craig Sundstrom
Guest
10 years 1 month ago

I suppose this story was meant to give me the warm fuzzies, and certainly I don’t want to discount either the realness of the problem Mr. Mycoskie is addressing or his cleverness is in addressing it; but I think there is an inherent problem in guilt being a business model–and make no mistake about it, he is ultimately selling “feel goodness” as much as footwear–and that problem is one element tends to overwhelm the other: what if TOMS’ shoes are really junk, or overpriced, should people still buy them? If people answer “yes, because it’s for a good cause” then there’s a problem.

Mike Romano
Guest
Mike Romano
10 years 1 month ago

I appreciate the intent of TOMS’ business model, however, it has one major flaw–Quality Product. I purchased 3 pairs of TOMS for my kids for about $50.00/pair, and all 3 pairs lasted 2 weeks before they fell apart. People love the “feel good” aspect of the donation pair, but how many families can really afford to do it a second time? I think repeat business will be a huge problem.

Ed Rosenbaum
Guest
10 years 1 month ago

I had the pleasure of hearing Blake Mycoskie speak at a conference last year. He is motivated to his cause. Because of it he motivates and stimulates others to get involved. People tend to join causes like this, especially because children are the focus. He will be successful if he takes the same model to other markets and/or segments of the clothing industry.

Shawn Harris
Guest
Shawn Harris
10 years 1 month ago

I applaud TOMS’ social entrepreneurship. In addition to the good that is being done across the world with One for One, he’s also created hundreds, if not thousands of jobs. There certainly needs to be more of a focus placed on supporting and training social entrepreneurs–we need more Blakes!

Jeff Hall
Guest
10 years 1 month ago

I believe TOMS represents the next wave in brand success and sustainability… that of building a company deeply aligned to a higher purpose. TOMS has created an internal culture in which every employee is working toward a clearly understood and positive shared social mission.

The key to TOMS’ long-term success will be continuing to attract employees who truly share in and support the mission. This shouldn’t be difficult, as those coming into the workforce today are for the most part already attuned to being socially and environmentally conscious.

David Livingston
Guest
10 years 1 month ago

Nice job on getting a little extra mileage on discontinued or unpopular shoes that would have quietly been headed to Goodwill.

Odonna Mathews
Guest
Odonna Mathews
10 years 1 month ago

Having never purchased a TOMS shoe, I can’t attest to their quality. But they should be excellent quality to help a child who doesn’t have any. Otherwise, what’s the purpose?

However, I like the one to one simplicity and clear messaging to consumers. Donating one million pairs of shoes is significant.

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